Focusing only on GDP and inflation misses the crucial role of unemployment in triggering market volatility and spread widening.

While GDP and inflation are critical indicators of economic health, unemployment also plays a significant role in market dynamics. High unemployment can lead to decreased consumer spending, which in turn affects corporate earnings and investor confidence. This can trigger market volatility and spread widening as investors seek safer assets.

Q2 2007 & July stock outlook:
– Real GDP 3.4%
– Core PCE 2.21%
– Stocks up double digits and slightly off of all time highs
– Spreads near all time lows

Employment continues to be #1 focus now and will be Fed’s ‘pivot point’ to ease. pic.twitter.com/He6gSDR4gi

— Don Johnson (@DonMiami3) July 26, 2024

Markets now pricing in three rate cuts before the end of the year following better inflation news, per CNBC

— unusual_whales (@unusual_whales) July 26, 2024

Now is a good time to look at the mixed historical relationship between rate cuts and equities: https://t.co/4ZOLp0B9gF

— Reef Insights (@ReefInsights) July 26, 2024

Historical Analysis: Unemployment Rate

Dating back to 1949, there has never been a time when an 11% year-over-year rise in unemployment didn't coincide with a recession.

In June 2024, the year-over-year rise in unemployment was measured at 13.9%.

Relevance of the Unemployment… pic.twitter.com/C9XQZmSt3S

— Reef Insights (@ReefInsights) July 26, 2024

S&P500

We paying attention ? https://t.co/KW6j0mWDfc pic.twitter.com/q2hCmOUmBb

— The Great Martis (@great_martis) July 25, 2024